Financial, Operations and Compensation

Retailer Benchmarking ReportFinancial, Operations and Compensation

2013

outdoorindustry.org $895

contentsKey Findings ...............................................................................................................................................3

MethOdOlOgy ...........................................................................................................................................5

exeCutive suMMaRy .............................................................................................................................6

detailed Results

Return on Investment ......................................................................................................................................12

Income Statement ...........................................................................................................................................14

Balance Sheet ..................................................................................................................................................15

Expenses in Relationship to Gross Margin ....................................................................................................16

Financial Ratios ................................................................................................................................................18

Asset Productivity and Cash Sufficiency ........................................................................................................19

Products ............................................................................................................................................................21

Sales and Marketing ........................................................................................................................................22

Operations .......................................................................................................................................................23

Employees ........................................................................................................................................................25

glOssaRy OF teRMs .............................................................................................................................30

Oia tOday .....................................................................................................................................................32

Prepared byProfit Planning Group1790 38th Street, Suite 204Boulder, CO 80301303.444.6212 v303.444.9245 f

Prepared forOutdoor Industry Association4909 Pearl East Circle, Suite 300Boulder, CO 80301303.444.3353 v303.444.3284 f

©2013 Outdoor Industry Association

2 Retailer Benchmarking Report · outdoorindustry.org

outdoorindustry.org

Just a few years ago, outdoor stores could set trends. Today, the consumer is in the driver’s seat and competition

may be around the world, not just next door. Amid this rapidly-evolving business landscape, businesses must

examine costs and productivity with increasing scrutiny, and information relating to financial and operational

norms becomes ever more important to remain competitive.

Outdoor product retailers have even more variables to take into account as the industry deepens its commitment

to sustainability, grapples with global supply chain challenges, faces unpredictable price fluctuations, and works

to understand and engage changing consumer preferences. Identifying how financial performance, product

mix, compensation expenses, and employee productivity compare against a field of competitive firms is an

invaluable business tool in today’s constantly changing marketplace.

In addition to this report, participating retailers also received a detailed, customized profit improvement analysis

that compared their performance versus the identified norms. The insights contained in these personalized

reports represent another significant benefit of OIA membership.

We would like to thank each participating company for their invaluable contribution to this effort. The collective

knowledge gained from this update will help ensure the continued growth and success of the outdoor industry.

Should you have any questions about this report or want to learn why your company should be an OIA member,

please contact us at 303.444.3353 or outdoorindustry.org.

Best regards,

Frank Hugelmeyer, President & CEO

Outdoor Industry Association

from OIAIt is my pleasure to present the 2013 Retailer Benchmarking Report, which presents a

detailed but straightforward analysis of the financial and operating characteristics and

compensation practices of outdoor product retailers. This study is one of the most

important tools that OIA offers to assist outdoor retailers improve their profit and

financial performance.

outdoorindustry.org · Retailer Benchmarking Report 3

The typical outdoor retailer generates strong profits, with a pre-tax bottom line of 3.1 percent of revenue. However,

the high-profit firms generate a bottom line of 9.3 percent of sales—almost three times as much profit as the typical

firm on the same sales volume.

This extraordinary level of profit performance revolves around three key factors: a significantly higher gross margin

percentage, lower employee costs and better space productivity. Each of these factors needs to be well understood

if the transition from typical to high-profit is going to be completed.

Gross Margin—The gross margin percentage for the typical firm is 40.3 percent, while the high-profit firm operates

on a gross margin of 43.0 percent. This difference of nearly three points represents one-third of the enhanced profit

of the more successful firms. Simply put, these firms do a better job of buying and maintaining price integrity.

» Gross margin is the single most important driver of profitability. It must be given first priority in all of

your thinking.

» There are numerous ways to increase gross margin, including opportunistic buying from suppliers, systems

to control damage, theft and the like. They must all be used.

» As important as everything else is, price is by far the most important factor in increasing the gross

margin percentage.

» Raising your prices in a thoughtful way also has a positive impact on your sales volume. This is two for the

price of one.

» On key items your prices must be one hundred percent competitive. If you are high priced on key items you

are doing the same thing as announcing “we are high priced on everything that we sell.”

» On slower-selling items there are numerous opportunities to raise prices. Do not be afraid to experiment

with raising prices.

Employee Costs—From an employee utilization perspective, the typical firm operates on a payroll percentage

of 19.6 percent of sales versus 18.4 percent for the high-profit firm. The key to payroll control is to maintain an

adequate growth rate in sales year to year. This factor is important because the growth in payroll expenses tends to

be very closely related to the overall inflation rate. As long as sales growth can outpace payroll growth, the firm can

lower payroll as a percent of sales.

» Expenses do not have to be reduced. In fact, expenses tend to go up continually over time. The key is to

control them as they increase.

» Payroll is the key expense category. There is no way to get control of expenses without making

improvements in payroll.

» The major objective is to drive a two percent wedge between the rate of sales growth and payroll expense

growth. This does not involve reducing anybody’s wages.

key findingsWhat MaKes high-pROFit FiRMs diFFeRent?


» One easy way to get control of payroll is to stop doing things that none of your customers view as

having value.

» Most employees are doing a great job. However, as a business owners you can not be reluctant to

terminate employees who are simply not contributing.

Ideally, the sales growth rate should be at least equal to the inflation rate plus a safety factor of 3.0 percent or so.

In today’s economy, that would translate to at least a 5.0 percent increase in sales. In 2012 the high-profit firms

achieved 9.5 percent sales growth that provided a strong opportunity for increased employee productivity.

Space Productivity—Finally, the high-profit firms had much higher sales per square foot. Specifically, they generated

$473 in sales per square foot, versus only $373 for the typical operation. This allowed the more successful firms to

shave about one-half of a point off of occupancy expenses. Interestingly, they were also able to operate on slightly

lower levels of advertising and sales promotion.

These findings, in combination, suggest that the high-profit firms have positioned themselves as destination retailers

in the minds of their customer base. This not only allows for better performance today, but also helps ensure

success over the long term.

Interestingly, the more successful firms were actually less committed to online sales than the typical firm. Almost

90 percent of their sales came from brick and mortar merchandise sales versus around 80 percent for the typical

firm. In addition, only around 45 percent of the high-profit firms sold anything online. This may be a classic example

of trying to build a defensible in-store customer experience, though the downside risk of overlooking online

opportunities cannot be ignored.

The overall picture of profit performance in outdoor retailing is strong. As stated earlier, the typical firm is producing

a 3.1 percent bottom line, which is certainly adequate. However, the opportunity exists to do a lot better, not just a

little better.

key findingsWhat MaKes high-pROFit FiRMs diFFeRent? (continued)


methodologyThis report presents a detailed but straightforward analysis of financial and operating characteristics of 51

participating firms. Results are presented in tables and graphs designed to provide a comprehensive guide for

analyzing profitability.

Survey questionnaires were distributed to collect detailed financial and operating information. Completed

questionnaires were returned directly to Profit Planning Group for analysis. Individual responses were kept strictly

confidential by Profit Planning Group. No one from OIA or any other firm had access to any individual firm’s survey

or results. Survey submissions are destroyed after processing.

Definitions

» Median Firm

Most of the figures presented in this report are based on median results. A median is the middle value in

the sorted list of all reported values. Unlike averages, medians are not influenced by extreme values and

are, therefore, the preferred statistic for this analysis. Medians best represent a typical firm’s results.

» High-Profit Firm

A high-profit group was identified based on pre-tax return on assets (ROA). This group includes firms within

roughly the top 25 percent of ROA results. The high-profit column presents results based on the medians of

the data reported by these participants.

» Sales Volume

An analysis of firms within sales volume groups.

Statistics

» Averages for Inventory, Accounts Receivable, and Accounts Payable

If available, calculations use average values for inventory, accounts receivable, and accounts payable.

» FIFO Adjustment

If LIFO reserve information was collected, cost of goods sold, gross margin, and inventory were adjusted to

present FIFO performance.

» The N/A Label

Throughout this report, “N/A” designates results that are not available due to limited samples.


executive summaryFinancial performance varied widely among participants in 2012. The results show

that the typical or median firm generated sales of $2,900,000 and a pre-tax profit of

3.1 percent. Sales for the typical high-profit firm were $2,195,396, with a profit of 9.3

percent. Of greatest consequence, the typical firm had a 7.7 percent pre-tax return on

assets (profit before taxes expressed as a percentage of total assets) while the typical

high-profit firm generated an ROA of 30.7 percent.

A number of factors led to the differences in overall results. In most instances these differences can be illustrated by

examining what are commonly called the critical profit variables (CPVs). The following exhibit compares the critical

profit variables for the typical firm and the typical high-profit firm.

High-profit firms may not always perform better in every CPV but their combined CPV performance produces better

overall results. Since these differences can dramatically improve operating performance it is important that every

firm is aware of their impact.

The Critical Profit Variables

Sales Per Employee ($)Measures employee productivity

Gross Margin (%)Reflects the ability to manage COGS effectively

Operating Expense (%)Focuses on expense control

Inventory Turnover (times)Reflects how well inventory is managed

MedianFirm

High-Profit*Firm

SalesUnder $1.5

Million

Sales$1.5 - $5Million

SalesOver $5Million

115,258

40.3

36.7

2.0

114,174

43.0

33.3

2.8

108,429

40.8

40.3

1.8

111,928

38.8

35.2

2.1

145,868

41.1

37.9

2.0

* This group includes firms within roughly the top 25 percent of ROA results.


Sales Sales Sales Median High-Profit Under $1.5 $1.5 - $5 Over $5 Firm Firm Million Million Million

51 13 15 20 16

2,900,000 2,195,396 802,951 2,845,543 8,818,001

1,731,300 1,251,376 475,347 1,741,472 5,193,803

1,168,700 944,020 327,604 1,104,071 3,624,198

1,064,300 731,067 323,589 1,001,631 3,342,022

104,400 212,953 4,015 102,440 282,176

-14,500 -8,782 -4,015 -11,382 -44,090

89,900 204,171 0 91,058 238,086

3.1 9.3 0.0 3.2 2.7

100.0 100.0 100.0 100.0 100.0

59.7 57.0 59.2 61.2 58.9

40.3 43.0 40.8 38.8 41.1

19.6 18.2 22.1 18.5 19.3

7.2 6.7 8.7 6.6 7.9

9.9 8.4 9.5 10.1 10.7

36.7 33.3 40.3 35.2 37.9

3.6 9.7 0.5 3.6 3.2

-0.5 -0.4 -0.5 -0.4 -0.5

3.1 9.3 0.0 3.2 2.7

executive summary

Gross Margin (%)

MEDIANFIRM

HIGH-PROFITFIRM

SALES UNDER $1.5

MILLION

Gross Margin & Operating Expenses (%)

SALES $1.5 – $5MILLION

SALES OVER $5 MILLION

50.0

40.0

30.0

20.0

25.0

35.0

45.0

10.0

15.0

0.0

5.0

Operating Expense (%)

40.3 36.7 43.0 33.3 40.8 40.3 38.8 35.2 41.1 37.9

Number of Firms Reporting

Income Statement

Net Sales ($)

Cost of Goods Sold

Gross Margin

Operating Expenses

Operating Profit

Other Income/Expenses

Profit Before Taxes

Profit Before Taxes (%)

Net Sales (% of sales)

Cost of Goods Sold

Gross Margin

Operating Expenses

Payroll Expenses

Occupancy Expenses

Other Operating Expenses

Total Operating Expenses

Operating Profit

Other Income/Expenses

Profit Before Taxes

[For more on the Income Statement see page 14]

An Overview of Financial Results


outdoorindustry.org

executive summary


52,200 83,159 11,562 64,878 239,849

916,400 496,958 264,974 931,062 2,546,639

191,400 85,155 44,644 142,277 740,712

1,160,000 665,272 321,180 1,138,217 3,527,200

7.7 30.7 0.0 8.0 6.7

Assets ($)

Cash & Marketable Securities

Inventory

All Other Assets

Total Assets ($)

Return on Assets (%)

[For more on the Balance Sheet see page 15]

Return on Assets (%)

35.0

30.0

25.0

20.0

15.0

10.0

5.0

0.07.7 30.7 0.0 8.0 6.7

MEDIAN FIRM

HIGH-PROFITFIRM

SALES UNDER $1.5

MILLION



The balance sheet is an underutilized financial statement. If properly analyzed, it provides significant insights into

the financial structure of the firm. This page examines the composition of the balance sheet while the pages that

follow derive some key ratios from the balance sheet information.


outdoorindustry.org

executive summary


3.1 9.3 0.0 3.2 2.7

2.5 3.3 2.5 2.5 2.5

7.7 30.7 0.0 8.0 6.7

2.5 3.1 1.7 2.8 2.7

19.2 95.2 0.0 22.4 18.1

Strategic Profit Model Ratios

Profit Margin (pre-tax %)

Asset Turnover

Return on Assets (pre-tax %)

Financial Leverage

Return on Net Worth (pre-tax %)

Return on investment is the most meaningful way to evaluate overall business profitability. It is important to

understand how return on investment is calculated and how it can be improved.

[For more on

Return on Investment see page 12]

90.0

Return on Net Worth (%)

80.0

100.0

70.0

60.0

50.0

40.0

30.0

20.0

10.0

0.019.2 95.2 0.0 22.4 18.1

MEDIANFIRM

HIGH-PROFITFIRM

SALES UNDER $1.5

MILLION




executive summary


2.2 2.2 4.6 2.3 1.9

35.1 44.4 12.5 39.1 40.4

53.3 54.8 35.0 55.6 63.7

1.2 0.9 0.5 1.5 1.3

7.7 29.9 0.8 8.4 7.5

6.7 11.6 0.3 10.5 6.1

Current Ratio

Accounts Payable to Inventory (%)

Accounts Payable Payout Period (days)

Debt to Equity

EBIT to Total Assets (%)

Times Interest Earned

Suppliers, bankers and outside creditors have a wide range of financial ratios at their disposal to measure the

overall financial integrity of the firm. These ratios are among the most commonly used to analyze trends and to

compare the firm’s financials to those of other firms.

[For more onFinancial Ratios see page 18]

Given the significance of both accounts receivable and inventory, it is important to measure the productivity of

these asset investments using the ratios on this page. For both of these asset categories the objective is not

necessarily to minimize their value. Rather, the objective is to utilize both for maximum profitability.


2.0 2.8 1.8 2.1 2.0

186.4 128.7 197.6 172.2 180.1

3.4 4.8 3.2 3.6 3.6

134.7 189.4 129.1 141.2 163.7

Inventory Turnover

Inventory Holding Period (days)

Sales to Inventory Ratio

Gross Margin Return on Inventory

[For more onAsset Productivity see page 19]

Inventory Turnover (Turns)

3.0

2.5

2.0

1.5

1.0

0.5

0.02.0 2.8 1.8 2.1 2.0

MEDIANFIRM

HIGH-PROFITFIRM

SALES UNDER $1.5

MILLION




executive summary


115,258 114,174 108,429 111,928 145,868

44,348 39,859 37,648 41,673 63,854

21,918 15,505 17,043 22,205 29,690

48.6 42.3 54.2 47.7 46.9

Sales per Employee ($)

Gross Profit per Employee ($)

Payroll per Employee ($)

Personnel Productivity Ratio (%)

[For more on Employees see page 25]

Net Sales & Gross Profit per Employee ($)

160,000

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0

MEDIANFIRM

HIGH-PROFITFIRM

SALES UNDER $1.5

MILLION



115,258 44,348 114,174 39,859 108,429 37,648 111,928 41,673 145,868 63,854



Employee costs make up the single largest expense on the income statement. Employees are the lifeblood of the

organization. Without properly motivating and compensating the workforce, few firms can produce much more

than basic levels of performance.

The key to successfully managing employee costs is not focusing on the absolute level of compensation, but

on employee productivity. Two key employee productivity ratios are sales per employee and the personnel

productivity ratio. Both measure employee output.


outdoorindustry.org


3.1 9.3 0.0 3.2 2.7

2.5 3.3 2.5 2.5 2.5

7.7 30.7 0.0 8.0 6.7

2.5 3.1 1.7 2.8 2.7

19.2 95.2 0.0 22.4 18.1

Strategic Profit Model Ratios

Profit Margin (pre-tax %)

Asset Turnover

Return on Assets (pre-tax %)

Financial Leverage

Return on Net Worth (pre-tax %)

There are two distinct return on investment measures. Both have their own value in analyzing performance.

» Return on assets looks at the economic viability of the firm.

» Return on net worth (or return on owner equity) examines the return being generated for the owners.

These two return on investment ratios are driven by three performance ratios. Each of these represents a different

strategy, or profitability pathway, to improve return on investment:

» Profit margin focuses on revenue, gross margin management and operating expense control.

» Asset turnover reflects the sales the firm produces per dollar invested in assets.

» Financial leverage measures the total dollars of assets per dollar of net worth.

detailed resultsRetuRn On investMent

Return on investment is the most meaningful way to evaluate overall business profitability.

It is important to understand how return on investment is calculated and how it can be

improved.


detailed resultsRetuRn On investMent

These five ratios can be combined into what is commonly called the Strategic Profit Model to present a graphical

analysis of return on investment. The strategic profit model for the typical firm is presented below.

Path 1: Profit Margin = Profit Before Taxes ÷ Net Sales x 100

The first, and most important, profitability pathway is profit margin management. In the figure above, a profit margin

of 3.1 percent means that for every $1.00 of sales the business was able to produce 3.1¢ in profit before taxes. Profit

margin focuses on revenue, gross margin management and operating expense control.

Path 2: Asset Turnover = Net Sales ÷ Total Assets

Asset turnover reflects the sales the firm produces per dollar invested in assets. The ratio of 2.5 means that the firm

is able to generate $2.50 in sales for every $1.00 in assets. If a firm’s cash, accounts receivable, inventory, property,

equipment, and all other assets can be used as efficiently as possible, then maximum revenue can be generated

from a given asset investment.

Return On Assets = Profit Before Taxes ÷ Total Assets x 100

Return on assets (ROA) is the direct result of the first two pathways; profit margin multiplied by asset turnover. This

measure of performance is a good indicator of the firm’s ability to survive and prosper.

Path 3: Financial Leverage = Total Assets ÷ Net Worth

Financial leverage measures the total dollars of assets per dollar of net worth. The ratio measures the extent to

which the firm uses outside (non-owner) financing. The higher the ratio, the more the firm relies on outside financ-

ing. The ratio of 2.5 times suggests that for every $1.00 in net worth, the firm had $2.50 in total assets. If for every

$2.50 in total assets the owners put up $1.00, then outsiders put up the remaining $1.50.

Return On Net Worth = Profit Before Taxes ÷ Net Worth x 100

The end result of the three profitability pathways is return on net worth. It is seldom possible to generate an

adequate rate of return on net worth by emphasizing just one of the profitability pathways. Each pathway

should be examined for improvement opportunities then tradeoffs made to increase overall profitability.

path 1Profit Margin

Profit Before TaxesNet Sales

3.1%

path 2Asset Turnover

Net SalesTotal Assets

2.5

Return on Assets

Profit Before TaxesTotal Assets

7.7%

path 3Financial Leverage

Total AssetsNet Worth

2.5

Return on Net Worth

Profit Before TaxesNet Worth

19.2%x = =x


detailed resultsinCOMe stateMent

The income statement reflects the ability of management to generate sales at a reasonable margin, control expenses

and earn an equitable profit. It serves as the primary scorecard of management’s effectiveness.


Number of Firms Reporting Median Sales Volume ($) Sales Change (2011 to 2012 %) Projected Sales Change (2012 to 2013 %)Income Statement (% of sales) Net SalesCost of Goods Sold Cost of Merchandise SalesFreight InOutbound ShippingCost of Rental & Service Equipment & PartsTotal Cost of Goods SoldGross MarginPayroll Expenses OwnersManagementSalesMarketingInformation Tech. (incl. call center & internet support)Warehouse/FulfillmentAdministrationAll Other Salaries, Wages & BonusesTotal Salaries, Wages & BonusesPayroll Taxes (all FICA, workers’ comp., etc.)Group Insurance (all hospital, medical, etc.)Benefit Plans (all fringes, pension, profit sharing, etc.)Total Payroll ExpensesOccupancy Expenses Utilities (heat, light, power, water)Building Repairs & MaintenanceRent or Real Estate OwnershipTotal Occupancy ExpensesOther Operating Expenses AdvertisingOther Promotional ExpenseTelephoneInsurance (business liability & casualty)Taxes & LicensesDepreciation (other than real estate)Bank Card ChargesAll Other Operating ExpensesTotal Other Operating ExpensesTotal Operating ExpensesOperating ProfitOther IncomeCash Discounts from SuppliersInterest ExpenseOther Non-operating ExpensesProfit Before Taxes

512,900,000

5.25.3

100.0

58.31.40.00.0

59.740.3

2.83.68.80.30.40.80.80.017.51.60.50.0

19.6

0.80.46.07.2

2.20.20.30.50.10.82.13.79.936.73.60.00.00.50.03.1

132,195,396

9.53.8

100.0

55.11.90.00.0

57.043.0

2.13.49.80.00.00.40.50.016.21.30.70.0

18.2

0.70.35.76.7

1.90.10.30.30.10.01.83.98.433.39.70.00.20.60.09.3

15802,951

5.05.3

100.0

57.41.40.20.2

59.240.8

7.64.08.40.00.10.00.00.020.12.00.00.0

22.1

0.90.37.58.7

1.80.70.40.50.10.02.63.49.540.30.50.00.00.50.00.0

202,845,543

5.34.7

100.0

59.31.80.10.0

61.238.8

2.44.27.60.00.01.11.00.016.31.60.60.0

18.5

0.60.45.66.6

2.60.30.30.60.10.81.93.5

10.135.23.60.00.00.40.03.2

168,818,001

6.27.1

100.0

57.91.00.00.0

58.941.1

1.32.59.70.60.71.11.00.117.01.50.50.3

19.3

0.90.66.47.9

2.10.00.50.50.11.22.14.2

10.737.93.20.00.00.50.02.7


detailed resultsBalanCe sheet

The balance sheet is an underutilized financial statement. If properly analyzed, it provides significant insights into

the financial structure of the firm. This page examines the composition of the balance sheet while the pages that

follow derive some key ratios from the balance sheet information.

Balance Sheet (% of assets)

Median Assets ($)

Assets

Cash & Marketable Securities

Inventory

Other Current Assets

Total Current Assets

Total Fixed & Noncurrent Assets

Total Assets

Liabilities and Net Worth

Accounts Payable (trade)

Notes Payable

Other Current Liabilities

Total Current Liabilities

Long Term Liabilities

Net Worth or Owner Equity

Total Liabilities & Net Worth

1,160,000

4.5

79.0

1.9

85.4

14.6

100.0

29.2

7.7

9.0

45.9

13.7

40.4

100.0

665,272

12.5

74.7

1.5

88.7

11.3

100.0

29.4

4.6

7.7

41.7

26.3

32.0

100.0

321,180

3.6

82.5

4.7

90.8

9.2

100.0

18.0

12.9

5.4

36.3

5.1

58.6

100.0

1,138,217

5.7

81.8

1.0

88.5

11.5

100.0

29.6

6.6

6.6

42.8

21.1

36.1

100.0

3,527,200

6.8

72.2

2.3

81.3

18.7

100.0

31.3

5.4

12.7

49.4

13.0

37.6

100.0



detailed resultsexpenses in RelatiOn tO gROss MaRgin

Gross margin represents the income available after paying for all product purchases. Many firms like to examine

expenses in relationship to gross margin. The feeling is that gross margin represents the money available for

expenses and profit, so the analysis provides a good basis for control.

One word of caution is in order. Gross margins may vary by an appreciable amount in the industry. Consequently,

an expense item that is a low percentage of gross margin may reflect excellent expense control or it may reflect

greater success in producing gross margin. The figures must always be viewed in that light.


Expenses in Relation to GM (% of gross profit)Gross MarginPayroll ExpensesOwnersManagementSalesMarketingInformation Tech. (incl. call center & internet support)Warehouse/FulfillmentAdministrationAll Other Salaries, Wages & BonusesTotal Salaries, Wages & BonusesPayroll Taxes (all FICA, workers’ comp., etc.)Group Insurance (all hospital, medical, etc.)Benefit Plans (all fringes, pension, profit sharing, etc.)Total Payroll Expenses Occupancy ExpensesUtilities (heat, light, power, water)Building Repairs & MaintenanceRent or Real Estate OwnershipTotal Occupancy ExpensesOther Operating Expenses AdvertisingOther Promotional ExpenseTelephoneInsurance (business liability & casualty)Taxes & LicensesDepreciation (other than real estate)Bank Card ChargesAll Other Operating ExpensesTotal Other Operating ExpensesTotal Operating ExpensesOperating ProfitOther IncomeCash Discounts from SuppliersInterest ExpenseOther Non-operating ExpensesProfit Before Taxes

100.0

6.98.921.90.71.02.02.00.043.44.01.20.0

48.6

2.01.014.917.9

5.50.50.71.20.22.05.29.3

24.691.18.90.00.01.20.07.7

100.0

4.97.922.80.00.00.91.20.037.73.01.60.0

42.3

1.60.713.315.6

4.40.20.70.70.20.04.29.1

19.577.422.60.00.41.40.0

21.6

100.0

18.69.820.70.00.20.00.00.049.34.90.00.0

54.2

2.20.718.421.3

4.41.71.01.20.20.06.48.4

23.398.81.20.00.01.20.00.0

100.0

6.210.819.60.00.02.82.60.042.04.21.50.0

47.7

1.51.014.517.0

6.70.80.81.50.32.14.99.0

26.190.89.20.00.01.00.08.2

100.0

3.26.123.61.51.72.72.40.241.43.61.20.7

46.9

2.21.515.619.3

5.10.01.21.20.22.95.110.326.092.27.80.00.01.20.06.6


detailed resultsexpenses in RelatiOnship tO gROss MaRgin

MORE ABOuT GROSS MARGIN

» Gross margin is the single most important driver of profitability. It must be given first priority in all

of your thinking.

» There are numerous ways to increase gross margin, including opportunistic buying from suppliers, systems

to control damage, theft and the like. They must all be used.

» As important as everything else is, price is by far the most important factor in increasing the gross

margin percentage.

» Raising your prices in a thoughtful way also has a positive impact on your sales volume. This is two for the

price of one.

» On key items your prices must be one hundred percent competitive. If you are high priced on key items you

are doing the same thing as announcing “we are high priced on everything that we sell.”

» On slower-selling items there are numerous opportunities to raise prices. Do not be afraid to experiment

with raising prices.

outdoorindustry.org


detailed resultsFinanCial RatiOs

Suppliers, bankers and outside creditors have a wide range of financial ratios at their disposal to measure the overall

financial integrity of the firm. The specific ratios most commonly used in this process are covered on this page.

Financial Ratios

Current Ratio

Accounts Payable to Inventory (%)


Debt to Equity

EBIT to Total Assets (%)


Current Ratio = Current Assets ÷ Current LiabilitiesThe current ratio measures the margin of safety that management maintains in order to allow for the inevitable

unevenness in the flow of funds through the current asset and current liability accounts. A company needs a supply

of current funds to be assured of being able to pay its bills when they come due.

Accounts Payable to Inventory = Accounts Payable ÷ Inventory x 100This ratio measures the extent to which a company’s inventory is financed by the suppliers of that inventory.

Increasingly, firms are looking to finance a major portion of their inventory via supplier financing.

Accounts Payable Payout Period = Accounts Payable ÷ (Cost of Goods Sold ÷ 365 days)The accounts payable payout period measures the timeliness of paying suppliers. This figure is related directly to

the normal credit terms of the company’s purchases.

Debt to Equity = Total Liabilities ÷ Net WorthThe greater the proportion of its financing that is obtained from owners, the less worry the company has in meeting

its fixed obligations. At the same time excessive reliance on owner financing slows the rate at which the firm can

grow. The debt to equity ratio shows the balance that management has struck between debt and owners’ equity.

EBIT to Total Assets = Earnings Before Interest and Taxes ÷ Total Assets x 100EBIT to total assets is a return on investment ratio that provides a profit analysis based on earnings before interest

and income taxes. This ratio is best compared with a company’s annual interest rate on borrowed funds.

Times Interest Earned = (Profit Before Taxes + Interest) ÷ InterestThe times interest earned ratio measures the number of times profit before interest and taxes will cover total

interest payments on debt. The result indicates the level to which income can decline without impairing the

company’s ability to meet interest payments on its liabilities.


2.2 2.2 4.6 2.3 1.9

35.1 44.4 12.5 39.1 40.4

53.3 54.8 35.0 55.6 63.7

1.2 0.9 0.5 1.5 1.3

7.7 29.9 0.8 8.4 7.5

6.7 11.6 0.3 10.5 6.1


detailed resultsasset pROduCtivity and Cash suFFiCienCy

Given the significance of both accounts receivable and inventory, it is important to measure the productivity of these

asset investments using the ratios on this page. For both of these asset categories the objective is not necessarily to

minimize their value. Rather, the objective is to utilize both for maximum profitability.

Asset Productivity

Inventory Turnover


Sales to Inventory Ratio

Gross Margin Return on Inventory (%)

Cash Sufficiency

Cash to Current Liabilities (%)

Defensive Interval (days)

Sales to Working Capital

Inventory Turnover = Cost of Goods Sold ÷ InventoryInventory turnover is an indication of the velocity with which merchandise dollars move through the business. In the case of the typical retailer, the turnover figure of 2.0 means that the firm sells out the equivalent of its inventory value 2.0 times per year.

Inventory Holding Period = 365 days ÷ Inventory TurnoverThe inventory holding period reflects how many days of inventory are on hand. That is, it shows how long it should take to sell off the existing inventory. Business managers and owners must be concerned with a hold-ing period that is longer than necessary due to the high costs of capital tied up in excess inventory. On the other hand, reducing inventory levels too much could result in lost sales if certain products are not available when the customer wants them. The cost of carrying inventory has to be balanced against the profit opportu-nities lost by not having product in stock ready for sale.

Sales to Inventory Ratio = Net Sales ÷ Inventory at CostThe sales to inventory ratio is another method for measuring how quickly inventory turns over in the company. It demonstrates how much sales volume is produced per dollar of inventory investment. The figure of 3.4 for the typical retailer indicates that the firm generates $3.40 of sales annually for each dollar tied up in inventory.

Gross Margin Return on Inventory = Gross Profit ÷ Inventory x 100The basic objective of Gross Margin Return on Inventory (GMROI) is to view the inventory from a return on investment perspective. Consequently, the ratio measures how many gross margin dollars are produced from each dollar invested in inventory. GMROI facilitates the evaluation of products with widely varying gross mar-gin and inventory utilization rates.


2.0 2.8 1.8 2.1 2.0

186.4 128.7 197.6 172.2 180.1

3.4 4.8 3.2 3.6 3.6

134.7 189.4 129.1 141.2 163.7

10.1 21.9 10.1 8.4 12.9

20.1 39.6 13.8 16.4 25.5

6.0 6.0 4.5 5.1 7.3


Cash to Current Liabilities = Cash ÷ Current Liabilities x 100This is the most stringent test of the firm’s ability to meet short-term obligations with existing cash balances.

Defensive Interval = Cash ÷ (Operating Expenses other than Depreciation ÷ 365 days)The defensive interval measures how long the firm can operate using nothing but existing cash balances. It provides a worst-case analysis of the adequacy of the firm’s cash position if sales and collections suddenly deteriorated.

Sales to Working Capital = Net Sales ÷ (Current Assets – Current Liabilities)Measures the ability of the firm to generate sales without tying up high levels of investment in working capital. A ratio of 6.0, for example, means the firm can generate $6.00 in sales for every $1.00 invested in working cap-ital. This ratio can be improved by changes in any of the three working capital variables—improving inventory turnover, reducing accounts receivable collections or obtaining more favorable accounts payable payment terms.

detailed resultsasset pROduCtivity and Cash suFFiCienCy

outdoorindustry.org


detailed resultspROduCts

Product Sales (% of sales)

Hardgoods

Apparel

Footwear

Total Sales

Product Gross Margin

Hardgoods

Apparel

Footwear

Product Inventory Turnover

Hardgoods

Apparel

Footwear

Product SKUs (% of SKUs)

Hardgoods

Apparel

Footwear

Total SKUs

Activity SKUs Stocked (% of firms)

Action Sports (surf, skate, slackline, parkour)

Camping

Climbing

Cycling

Fishing

Hiking

Hunting

Paddlesports (kayak, canoe, SUP)

Running (road, trail)

Snowsports (ski, snowboard)

Watersports (boating, dive, scuba)

All Other Activities

SKU Productivity

Number of SKUs

Sales per SKU ($)

Inventory per SKU ($)

49.5

39.6

10.9

100.0

40.7

44.2

43.9

1.7

1.9

1.6

48.1

40.3

11.6

100.0

21.3

70.2

53.2

27.7

31.9

74.5

4.3

61.7

59.6

57.4

27.7

55.3

9,400

290

58

48.0

41.5

10.5

100.0

40.0

46.8

45.0

3.0

2.6

1.6

70.7

24.7

4.6

100.0

36.4

45.5

54.5

36.4

18.2

54.5

0.0

36.4

54.5

36.4

27.3

45.5

18,445

229

52

45.5

47.5

7.0

100.0

40.6

42.7

42.7

1.4

1.3

1.1

53.2

38.3

8.5

100.0

20.0

46.7

20.0

33.3

33.3

53.3

6.7

40.0

46.7

33.3

40.0

33.3

6,900

105

41

45.9

43.2

10.9

100.0

43.1

44.7

44.6

2.3

1.9

1.6

53.8

36.3

9.9

100.0

15.8

89.5

68.4

21.1

42.1

89.5

5.3

78.9

52.6

68.4

21.1

68.4

10,000

294

50

44.8

39.5

15.7

100.0

39.9

41.8

43.6

1.8

2.1

1.8

40.6

44.3

15.1

100.0

30.8

69.2

69.2

30.8

15.4

76.9

0.0

61.5

84.6

69.2

23.1

61.5

13,203

1,538

269



Source of Revenue (% of sales)

Rentals, Service

Guides, Training, Education

Brick & Mortar Merchandise Sales

Catalog Merchandise Sales

Internet Merchandise Sales

Total Sales

Sell Online (% of firms)

Online Presence (% of firms online)

Own Website/Shopping Cart

Marketplace/Auction Sites (eBay, etc.)

Amazon

Fulfillment by Amazon

Other Online Presence

Website Visitors (unique visitors, monthly avg.)

Advertising Used (% of firms)

Internet Banner Ads

Search Engines

Social Media

Email Marketing

Affiliate Sites

Comparison Sites (Pricegrabber, Nextag, etc.)

Direct Mail

Broadcast Television

Cable Television

Radio

Newspapers

2.8

2.8

80.5

0.4

13.5

100.0

56.0

100.0

25.0

28.6

14.3

14.3

15,179

38.8

46.9

83.7

81.6

22.4

12.2

57.1

8.2

12.2

57.1

69.4

1.3

0.5

87.9

0.0

10.3

100.0

46.2

100.0

16.7

33.3

16.7

16.7

1,000

41.7

41.7

66.7

58.3

25.0

8.3

50.0

16.7

25.0

33.3

66.7

6.1

8.3

78.5

0.1

7.0

100.0

35.7

100.0

60.0

40.0

40.0

40.0

1,000

26.7

40.0

73.3

73.3

20.0

6.7

26.7

6.7

0.0

46.7

60.0

1.3

0.7

82.5

0.3

15.2

100.0

55.0

100.0

36.4

36.4

0.0

18.2

10,000

40.0

45.0

90.0

90.0

25.0

15.0

55.0

15.0

25.0

60.0

75.0

1.4

0.1

79.9

1.0

17.6

100.0

75.0

100.0

0.0

16.7

16.7

0.0

34,039

50.0

57.1

85.7

78.6

21.4

14.3

92.9

0.0

7.1

64.3

71.4

detailed resultssales and MaRKeting



detailed resultsOpeRatiOns

Years In BusinessOrganization (% of firms) Sole ProprietorshipPartnershipS CorporationC CorporationLLC (Limited Liability Corporation)LLP (Limited Liability Partnership)Co-OpTotal FirmsStoresSales per Store ($)Floorspace (average for all stores)Sales Square FootageSales per Square Foot ($)Gross Profit per Square Foot ($)Inventory per Square Foot ($)TransactionsNumber of TransactionsAverage Transaction ($)Average Units per TransactionCustomersNumber of Unique CustomersIn-Store Conversion RateOn-Line Conversion RateUse Loyalty/Reward Programs (% of firms)

20.0

3.93.939.225.525.50.02.0

100.01

1,815,796

6,65037314187

23,200942.7

15,68938.21.143.8

12.0

0.07.746.115.430.80.00.0

100.02

1,259,675

6,50047318298

23,525782.6

7,00043.00.330.8

11.0

13.36.746.66.726.70.00.0

100.01

750,000

2,8002179372

9,485802.8

3,2505.00.033.3

22.5

0.00.045.030.025.00.00.0

100.01

2,433,983

8,00021712892

24,909922.5

17,80050.02.061.1

35.0

0.06.3

25.037.425.00.06.3

100.04

3,617,484

10,0001,459598204

122,369963.0

126,11243.02.1

33.3

Operational issues are frequently overlooked as determinants of profitability. However, the ability to increase the average sale per transaction or to produce a higher level of sales per store has a dramatic impact on financial results. The following ratios are most commonly used in evaluating operational performance.


Sales per Square Foot = Net Sales ÷ Sales Square FootageThis is the classic measure of space productivity. It reflects the ability of the firm to generate adequate merchandise performance. It provides an excellent tool for measuring the sales productivity of different size stores.

Gross Profit per Square Foot = Gross Profit ÷ Sales Square FootageThis takes the sales per square foot concept one step further to incorporate the pricing and buying decisions. It is beginning to move closer to a true measure of profitability per unit of space.

Inventory per Square Foot = Inventory ÷ Sales Square FootageThis ratio measures the inventory intensity of the operation. Firms with a high level of inventory per square foot generally produce dramatically higher levels of sales per square foot as well.

Average TransactionIf the firm can generate adequate sales per customer it can minimize the amount of time and expense it incurs in finding additional customers.


detailed resultsOpeRatiOns

outdoorindustry.org

MORE ABOuT SALES VOLuME

» It is not necessary to increase sales dramatically. A sales increase of around the inflation rate plus three to

five percent is sufficient.

» Growing too fast is actually worse than growing too slow. It drains the firm’s capital, beats up its employees,

and strains relationships with suppliers and customers.

» The most cost-effective way to increase sales is to sell more of existing products to existing customers. This

opportunity should be completely mined before moving on to other strategies.

» Raising your prices thoughtfully is by far the best way to increase sales volume. It requires no more effort

and no more expense.

» Carefully and objectively analyze the strengths and weaknesses of your competition. At some point you will

probably have to steal sales volume from them. Hit them where they are weakest.

» Don’t be afraid to tell customers how wonderful you are. No need to brag all the time, but when you go the

extra mile, point it out nicely.


detailed resultseMplOyees


Employee Productivity



Total Payroll Expenses (% of sales)

Personnel Productivity Ratio (%)

FTE Employees

Owners

Management

Sales

Marketing

Information Tech. (incl. call center & internet support)

Warehouse/Fulfillment

Administration

All Other Employees

Total Number of FTE Employees

Number of Seasonal FTE Employees

115,258

44,348

19.6

48.6

1.0

2.2

10.8

0.0

0.0

1.0

1.0

0.0

16.0

3.9

114,174

39,859

18.2

42.3

1.0

2.3

9.2

0.0

0.0

1.6

0.9

0.0

15.0

5.8

108,429

37,648

22.1

54.2

1.7

1.3

2.5

0.0

0.0

0.0

0.0

0.0

5.5

2.5

111,928

41,673

18.5

47.7

1.0

3.1

10.1

0.0

0.0

1.1

1.0

0.0

16.3

4.5

145,868

63,854

19.3

46.9

1.0

8.0

36.0

1.0

2.4

4.2

3.0

2.4

58.0

8.5

Employee costs make up the single largest expense on the income statement. Employees are the lifeblood of the

organization. Without properly motivating and compensating the workforce, few firms can produce much more than

basic levels of performance.

The key to successfully managing employee costs is not focusing on the absolute level of compensation, but on em-

ployee productivity. Two key employee productivity ratios are sales per employee and the personnel productivity ratio.

Both measure employee output.

Sales per Employee = Net Sales ÷ Total Full-Time Equivalent EmployeesThis is simply the level of sales generated per full-time equivalent (FTE) employee. The ratio provides a means to estimate how many additional employees will be required as the firm expands its sales base.

Personnel Productivity Ratio = Payroll Expense ÷ Gross Profit x 100The personnel productivity ratio (PPR) expresses total payroll expense as a percentage of gross profit. Total payroll includes not only salaries and wages, but also all payroll taxes, insurance coverages and other fringe benefits. The ratio measures the portion of each gross profit dollar that must be committed to payroll. This is one of the few productivity ratios where a lower figure is desirable.


50,000

78,600

54,231

50,000

75,000

17.9

30.4

78,600

90,796

17.9

75.0

54,231

72,500

12.7

62.5

75,000

90,796

72,500

N/A

72,500

N/A

N/A

N/A

N/A

N/A

N/A

N/A

65,946

N/A

N/A

46,144

69,500

27,241

34,250

42,375

N/A

12.5

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

128,000

199,875

208,125

50,000

53,450

N/A

33.3

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

17.9

17.9

12.7

122,500

160,000

N/A

50.0

100,000

103,500

17.9

80.0

106,892

166,250

N/A

75.0

Executive Compensation Summary

Chief Executive Officer/President/Owner

Chief Operating Officer

Chief Financial Officer

Chief Executive Officer

Salary

Total Compensation

Bonus of Salary (%)

Bonus Paid (% of firms)

Chief Operating Officer

Salary

Total Compensation

Bonus of Salary (%)


Chief Financial Officer

Salary

Total Compensation

Bonus of Salary (%)


Base Total Middle Range of Total Comp Bonus Salary Compensation 1st Quartile 3rd Quartile % of Salary

detailed resultsexeCutive COMpensatiOn


detailed resultseMplOyee COMpensatiOn


Typical Employee Bonus Plan (% of firms)

No Bonus

% of Company Profit

% of Store Profit

Pre-Determined Amount

Discretionary

Other Bonus Plan

Typical Sales Compensation Plan (% of firms)

Salary Only

Commission Only

Salary+Commission

Other Compensation Plan

24.5

8.9

8.9

4.4

40.0

13.3

65.0

2.5

17.5

15.0

22.2

11.1

0.0

0.0

55.6

11.1

57.1

14.3

14.3

14.3

41.7

0.0

0.0

8.3

41.7

8.3

50.0

0.0

30.0

20.0

17.6

17.6

11.8

0.0

35.4

17.6

81.2

0.0

6.3

12.5

18.8

6.3

12.4

6.3

43.8

12.4

57.2

7.1

21.4

14.3

50,000

40,000

29,500

47,670

38,500

47,501

47,500

38,500

26,000

35,000

65,000

40,000

27,750

20,000

25,000

30,000

60,000

40,500

30,000

57,650

41,500

57,250

56,250

42,500

30,000

44,500

76,537

40,667

29,750

20,800

26,000

32,000

31,200

35,650

22,000

37,000

29,000

30,375

42,150

35,750

26,000

33,312

56,000

32,250

23,470

18,720

20,000

25,360

125,830

58,750

55,500

108,749

50,875

123,700

147,922

59,675

33,800

117,925

110,773

53,107

38,300

27,125

31,200

37,860

N/A

12.3

N/A

8.5

N/A

N/A

N/A

7.5

N/A

N/A

14.0

10.9

4.0

4.9

5.5

5.3

Employee Compensation Summary

Controller

Accounting Manager

Accounts Payable Coordinator

Marketing Manager

Marketing Coordinator

IT/Web Retail Director

Buying/Purchasing Director

Buyer

Assistant Buyer

Inventory Manager

Regional Retail Director

Store Manager

Assistant Store Manager

Dedicated Sales -- Entry (under 2 yrs. exper.)

Dedicated Sales -- Experienced (2 to 5 yrs. exper.)

Dedicated Sales -- Senior (over 5 yrs. exper.)

Base Total Middle Range of Total Comp Bonus Salary Compensation 1st Quartile 3rd Quartile % of Salary



Controller Salary Total Compensation Bonus of Salary (%) Bonus Paid (% of firms) Accounting Manager Salary Total Compensation Bonus of Salary (%) Bonus Paid (% of firms) Accounts Payable Coordinator Salary Total Compensation Bonus of Salary (%) Bonus Paid (% of firms) Marketing Manager Salary Total Compensation Bonus of Salary (%) Bonus Paid (% of firms) Marketing Coordinator Salary Total Compensation Bonus of Salary (%) Bonus Paid (% of firms) IT/Web Retail Director Salary Total Compensation Bonus of Salary (%) Bonus Paid (% of firms) Buying/Purchasing Director Salary Total Compensation Bonus of Salary (%) Bonus Paid (% of firms) Buyer Salary Total Compensation Bonus of Salary (%)Bonus Paid (% of firms) Assistant Buyer Salary Total Compensation Bonus of Salary (%) Bonus Paid (% of firms) Inventory Manager Salary Total Compensation Bonus of Salary (%) Bonus Paid (% of firms)

50,00060,000N/A14.3

40,00040,50012.366.7

29,50030,000N/A33.3

47,67057,650

8.540.0

38,50041,500N/A37.5

47,50157,250N/A37.5

47,50056,250N/A33.3

38,50042,500

7.544.4

26,00030,000N/A14.3

35,00044,500N/A37.5

N/AN/AN/AN/A

N/AN/AN/AN/A

N/A

27,000N/AN/A

N/AN/AN/AN/A

N/AN/AN/AN/A

N/AN/AN/AN/A

N/AN/AN/AN/A

N/AN/AN/AN/A

N/AN/AN/AN/A

N/AN/AN/AN/A

N/AN/AN/AN/A

N/AN/AN/AN/A

N/AN/AN/AN/A

N/AN/AN/AN/A

N/AN/AN/AN/A

N/AN/AN/AN/A

N/AN/AN/AN/A

26,99926,999N/A0.0

N/AN/AN/AN/A

N/AN/AN/AN/A

N/A38,100N/AN/A

N/A

38,000N/AN/A

32,00033,750N/A50.0

N/AN/AN/AN/A

N/AN/AN/AN/A

N/A

29,289N/AN/A

45,00046,250N/A25.0

43,00547,250

7.583.3

N/AN/AN/AN/A

N/A

27,400N/AN/A

63,98898,615N/A25.0

N/A

45,000N/AN/A

26,90028,450N/A20.0

77,500104,832

N/A60.0

41,00043,500N/A33.3

58,25074,800N/A40.0

N/A

80,000N/AN/A

51,00057,900N/A42.9

31,00031,000N/A20.0

48,90052,800N/A40.0




Regional Retail Director Salary Total Compensation Bonus of Salary (%)Bonus Paid (% of firms) Store ManagerSalary Total Compensation Bonus of Salary (%)Bonus Paid (% of firms) Assistant Store ManagerSalary Total Compensation Bonus of Salary (%)Bonus Paid (% of firms) Dedicated Sales -- Entry (under 2 yrs. exper.)Salary Total Compensation Bonus of Salary (%)Bonus Paid (% of firms) Dedicated Sales -- Experienced (2 to 5 yrs. exper.)Salary Total Compensation Bonus of Salary (%) Bonus Paid (% of firms) Dedicated Sales -- Senior (over 5 yrs. exper.)Salary Total Compensation Bonus of Salary (%) Bonus Paid (% of firms)

65,00076,53714.083.3

40,00040,66710.958.3

27,75029,750

4.047.1

20,00020,800

4.958.3

25,00026,000

5.556.5

30,00032,000

5.350.0

N/AN/AN/AN/A

N/A

45,500N/AN/A

N/A

26,500N/AN/A

N/A

22,188N/AN/A

N/A

28,000N/AN/A

N/A

34,320N/AN/A

N/AN/AN/AN/A

31,00034,000N/A50.0

14,50014,500N/A0.0

20,00020,400

7.050.0

26,00026,000N/A42.9

32,00032,000N/A20.0

N/AN/AN/AN/A

38,00041,000

9.755.6

29,00033,000N/A60.0

19,00023,500

4.962.5

22,75029,750

5.862.5

29,00038,000

5.362.5

72,50076,53714.083.3

50,72154,14310.966.7

32,00034,300

4.662.5

19,76020,900

2.862.5

26,00026,000

2.162.5

30,60031,200N/A57.1



glossary of terms


Accounts Payable to Inventory

Asset Turnover

Cash Cycle (days)

Cash to Current Liabilities

Current Ratio

Debt to Equity

Defensive Interval (days)

EBIT to Total Assets

Financial Leverage

Gross Margin

Gross Margin Return on Inventory

Accounts Payable

Cost of Goods Sold ÷ 365 days

Accounts Payable x 100

Year-end Inventory

Net Sales

Total Assets

Avg. Collection Period + Inventory Holding Period

– Accounts Payable Payout Period

Cash x 100

Current Liabilities

Current Assets

Current Liabilities

Total Liabilities

Net Worth

Cash

(Operating Expenses – Depreciation) ÷ 365 days

(Profit Before Taxes + Interest) x 100

Total Assets

Total Assets

Net Worth

Gross Profit Dollars

Net Sales

Warehouse Gross Profit x 100

Inventory

Measures the promptness of paying suppliers

Measures the percent of inventory financed by suppliers of that inventory

Measures sales generated per dollar of assets

Days invested in a product from purchase until the sales invoice is collected

Measures ability to pay short-term debt with cash

Measures ability to pay short-term debt with current assets

Measures balance between debt and owner equity

Measures how long the firm can operate on existing cash balances

Measures earnings from opera-tions before interest and taxes as a percent of total assets

Measures assets financed per dollar of net worth

Measures profitability after the costs of making or buying the product are subtracted from sales

Measures gross margin earned per dollar of inventory

RATIO CALCuLATION COMMENT


glossary of terms


Inventory Turnover

Growth Potential Index

Personnel Productivity Ratio

Profit Margin

Return on Assets

Return on Net Worth

Sales per Employee

Sales to Fixed Assets

Sales to Inventory

Sales to Working Capital


365 days

Inventory Turnover

Warehouse Cost of Goods Sold

Inventory

Profit After Taxes x 100

AR + Inventory – AP

Payroll Expense x 100

Gross Profit

Profit Before Taxes x 100

Net Sales

Profit Before Taxes

Total Assets

Profit Before Taxes

Net Worth

Net Sales

Number of FTE Employees

Net Sales

Net Fixed Assets

Warehouse Sales

Year-end Inventory

Net Sales

Current Assets – Current Liabilities

Profit Before Taxes + Interest

Interest

Measures the number of days inventory is typically held in stock

Measures the number of times the entire inventory stock is sold per year

Measures how fast the firm can grow using internally generated funds

Measures payroll expense as a percent of gross margin earned

Measures profit earned as a percentage of net sales

Measures profit earned as a percent of assets

Measures profit earned as a percent of net worth

Measures sales generated per full-time employee

Measures the productivity of each dollar invested in fixed assets

Measures dollar sales generated per dollar of inventory

Measures ability to generate sales without tying up working capital

Measures number of times earnings will cover interest payments

RATIO CALCuLATION COMMENT


Outdoor Industry Association® (OIA) is the leading trade association for the outdoor

industry and the title sponsor of Outdoor Retailer.

Outdoor Industry Association (OIA) was founded in 1989 by a group of visionary outdoor industry professionals

who realized that “outdoor” could be much more than a passing consumer trend. Today, OIA is the leading trade

association and voice of the outdoor recreation industry, serving more than 4,000 manufacturers, distributors,

suppliers, sales representatives and retailers in the active outdoor lifestyle.

With offices Boulder, Colo., and Washington, D.C., OIA is the title sponsor of Outdoor Retailer and the trade

voice representing a $646 billion industry. OIA supports the growth and success of the outdoor industry through

its focus on government affairs, sustainability, outdoor consumer insights, industry trends and youth participation.

OIA hosts an annual industry leadership forum and delivers on-demand and in-person education, tools

and resources to help its members grow and succeed in the dynamic and ever-changing outdoor recreation

marketplace.

Every day, OIA works with our members to benefit the industry by:

» Advocating for issues critical to the future of the outdoor industry

» Building stronger business leaders

» Changing the way the world does business

» Inspiring and growing the active outdoor community

outdoorindustry.org

OIA today

Our Mission: To Ensure the Growth and Success of the Outdoor Industry

Outdoor Industry Association4909 Pearl East Circle, Suite 300Boulder, CO 80301303.444.3353outdoorindustry.org

® Outdoor Industry Association and the Outdoor Industry Association logo are registered trademarks of Outdoor Industry Association.

© Outdoor Industry Association, August 2013

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Financial, Operations and Compensation

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